Cardenas to Remain Finance Minister in Next Colombia GovernmentBill Faries and Oscar Medina
Mauricio Cardenas will stay on as Colombia’s Finance Minister after President Juan Manuel Santos is sworn in for a second four-year term next month.
Santos made the announcement at an event organized by Goldman Sachs Group Inc. in Miami, where he praised Cardenas’ handling of the economy, which grew at the fastest pace in Latin America in the first quarter. Cardenas’ reappointment will be “generally well received” by investors, said Camilo Perez, chief economist at Banco de Bogota, Colombia’s biggest bank.
In the new government, Cardenas, 52, will need to shore up tax revenues to finance a peace deal with Marxist rebels as well as health care reform, Perez said. Santos’s government has been holding peace talks with guerrillas of the Revolutionary Armed Forces of Colombia, or FARC, since 2012, seeking to end the country’s 50-year conflict.
“He’ll probably present a tax bill to Congress in the second half of the year,” Perez said in a telephone interview from Bogota. “This is going to be one of the big challenges.”
Since taking office in 2012, the Berkeley-educated economist has cut taxes on foreign bond investors, helping send the government’s borrowing costs to record lows, while overseeing a fiscal and monetary stimulus program that allowed the economy to rebound from a slowdown in at the end of 2012. At the same time, Cardenas has failed to curb a rally in the peso which he repeatedly described as “the mother of all problems” for Colombian industry.
“Despite his multiple pronouncements on the subject, he hasn’t been able to achieve the exchange rate that the government wants,” Perez said. The peso strengthened 0.2 percent to 1,860.75 per dollar today, stronger than the 2,000-2,200 peso rate that Santos says he wants, to help coffee growers and other exporters.
The peso rallied to its strongest level in more than a year this month, even as the central bank’s policy committee, which Cardenas chairs, doubled its daily dollar purchases.
Colombia’s economy expanded 6.4 percent in the first quarter, its fastest pace in more than two years, even as growth slowed in Peru, Chile and Brazil. Consumer prices rose 2.8 percent in June from a year earlier, below the 3 percent midpoint of the central bank’s target range. Santos will be sworn in for a second term on Aug. 7.